Gordon Reid's Top Picks: June 26, 2019

Gordon Reid's Top Picks

Gordon Reid, president and CEO of Goodreid Investment Counsel
Focus: U.S. equities

MARKET OUTLOOK

Is the impending reduction in interest rates by the Federal Reserve an insurance policy or a “too little, too late” attempt to stave off a recession? The debate is heated, but regardless, investors need to ensure that their investing house is in order. Is your asset mix on target? Are you diversified geographically, by sector and industry and properly dollar-weighted? Are your portfolio characteristics suitable to weather an economic downturn? You should be asking all those questions now, not later.

TOP PICKS

Gordon Reid's Top Picks

Gordon Reid, president and CEO of Goodreid Investment Counsel, shares his top picks: Chubb, Walt Disney and Walmart.

Strong pricing trends, healthy underwriting results and constructive cost management are leading to improved financial results at Chubb. On the valuation side this issue trades at a reasonable 1.3 times book value, which is not excessive when compared to peers or its own trading history.

The long-term outlook for Disney is solid, based on an outstanding legacy platform of media properties and of course their famous parks. Going forward, the tie up with Twenty-First Century Fox, and their announced plans for Disney Plus put them in direct competition with streaming giant Netflix. The market is now reconciling valuation, with Disney trading at a fraction of the valuation of Netflix.

Walmart, under the stewardship of Doug McMillon, has been making strategic investments over the past few years which are beginning to bear fruit. Their e-commerce presence is impressive, with roughly equal share to Amazon in the grocery space. Flipkart, their Indian e-commerce initiative, is gaining traction. Look for earnings per share to grow strongly in the coming years.

Even though there are longer-term challenges for his company, and some small businesses may not survive the pandemic, the outlook isn’t gloomy for everyone. Some experts say businesses could emerge stronger than before, and new waves of innovation could transpire.

After rolling out trillions of dollars worth of measures to prevent their economies and markets from collapsing, they are now doubling down with even more spending to backstop a recovery as coronavirus lockdowns ease.

“I’m concerned because many of our seasonal residents are not feeling as welcome. And they are welcome,” Phil Harding, mayor of the Township of Muskoka Lakes, Ont. told BNN Bloomberg in a phone interview Wednesday.

Dennis Mitchell, CEO and CIO at Starlight Capital talks about what corporate Canada needs to do to make a change when it comes to diversity and dismantling systemic racism. He suggests partnering with schools, improving the recruitment process and actually challenging the political class in this country. He says he's happy to speak with CEOs on this issue.